In order to maintain stable prices, what must the central bank do?
A) maintain low interest rates
B) keep unemployment low
C) tightly control the money supply
D) sell indexed bonds

Question

Quizplus · Accepted Answer

In order to maintain stable prices, the central bank must tightly control the money supply. This is because when there is too much money in circulation, it can lead to inflation, which causes prices to increase. Tight control of the money supply helps prevent inflation and maintain stable prices. The other options, such as maintaining low interest rates or selling indexed bonds, may have an impact on the economy but are not necessarily effective in controlling inflation and maintaining stable prices. Keeping unemployment low is also important for the economy, but it is not directly related to price stability.

In Order to Maintain Stable Prices, What Must the Central